Hayek Trumps Rothbard: Free Market in Money, not Fiat Gold
July 15, 2010 3 Comments
What we need is not for a socialist government to force us to all use Fiat Gold, which is what Rothbardian faux-Austrians claim, but instead to have a free market in currency, like Hayek and the real Austrians have long said.
Money is an accounting tool, it has its own intrinsic worth as a means of facilitating and measuring trade and value. If you saddle it with some secondary function and valuation, like forming jewelry and USB connectors, then you end up with an even more unstable economy, as the value of the money becomes less predictable, changing with the supply and demand of that secondary commodity.
This is why we had bigger, worse economic downturns from 1873-1934, on the gold standard, and our best overall period of growth from 1973-2001, when we left Breton Woods and had not yet encountered the massive, Hoover-like growth of government under Bush.